2013 Ballot Questions-Part 6: New York and Casinos

One of the most contentious issues in Albany these days is the expansion of casino gambling in the state. The issue goes to the voters this November and has been an ongoing battle since at least 1997. In 2010, the legislative session ended before they could vote on a proposal specific to Sullivan County. This ballot question would allow seven casinos in the state. The measure is being touted as a revenue generator for the state, a job creator, and a boon to educational funding and property tax relief in New York. In short, it sounds too good to be true and there is good reason for that: it is probably untrue.

First, let us look at the alleged financial impact. The state comptroller estimates that once the seven casinos are in operation, the state will take in enough money to make $934 million in total allocations to all of New York’s counties. These estimates are highly optimistic and assumes growth in the casino gambling industry despite statistics to the opposite. One need only look to their neighbors to see how casino gambling has failed to live up to its financial promise and when these promises are made, they only lead to letdowns.

Today, New Jersey, which has gambling in Atlantic City only, has seen casino revenues decline annually for the past few years. Although bad planning by the city and some miscues by individual operators along the way contributed to the decline, the fact is that casino gambling is not recession-proof. In Atlantic City today, one cannot truthfully say that casino gambling has been the answer as a “unique tool of urban renewal.” There are serious sections of blight in the city where fancy casinos overlook slums. Likewise, in Pennsylvania, after the initial hoopla over casino gambling, that state has also seen a steady drop off in casino revenues.

Second, the gambling market in the congested northeast corridor is reaching a saturation point in which New York will become just yet another player. They will be competing with a finite number of people in the market. When Pennsylvania added casino gambling- including the Philadelphia market- it seriously hurt the Atlantic City market. But, has anyone been to Bethlehem, Pennsylvania? Other than the casino, there is precious little else to do. Atlantic City was late in the urban renewal area and only in the past few years have they started to redevelop the city with shopping areas and the like. Ironically, the city still lacks a grocery store. And while places like Philadelphia and New York City have sights and attractions already present, people visit those cities to see those things- not to gamble. It may be “just another amenity” the city offers, but at what cost?

Proponents tout the fact that casinos will attract jobs to New York. Other than the initially high-paying construction jobs and upper management positions, casinos will lower the unemployment rate at first, but if anyone believes these jobs will shrink the income gap, they are living in a strange world. Casinos mainly provide low-paying jobs. Dealers, for example, rely on tokes, not an hourly wage- a sum that changes by the week. Furthermore, technology has rendered many jobs in the casino industry obsolete. Gone are the days of roving change people selling coin and slot attendants filling slot hoppers. Most Atlantic City casinos have no more than four slot attendants on any shift to cover the entire casino floor because they simply do not need that many.

In Atlantic City and Philadelphia and elsewhere, when a casino’s revenues begin to decline- as they surely will in New York- the first casualties are the low-paid workers. With less customers, there is less need for the number of cashiers, the number of dealers, the number of cleaning people, etc. While initially staffing a new casino will likely lower the unemployment figures in the area in the short term, those figures will eventually rise again as the layoffs become reality.

Opponents argue that expansion of casino gambling in New York will lead to sweetheart deals between developers and the local and state governments in the form of subsidies and tax abatements. The experience of the Revel Casino in Atlantic City is informative here. New Jersey and the city worked out one of these deals with the developers of the Revel to complete the project. Today, it dominates the Atlantic City skyline. The state used funds to widen the roads and beautify the entrance to that part of the city. The city granted a tax abatement and the state “loaned” the developers money. It is a brand new casino where virtually no one visits or gambles. Despite being the newest and swankiest casino, it has the lowest revenue in the city. The revenue was so low that the casino entered bankruptcy one year after opening its doors. With bankruptcy came massive layoffs in all departments. Some of this was due to really bad marketing by the casino itself, but the bottom line is that the city is receiving no property tax revenue from the place and the state is on the hook for the money loaned. At least the citizens of Atlantic City got better lighting on their streets and some landscaping, but little else.

Proponents argue that casino expansion in New York will help attract more tourists. However, the plan proposed by Andrew Cuomo and endorsed by New York Democrats defeats this argument. That plan calls for four casinos upstate and three in the New York City metropolitan area. The bulk of New York’s population resides in that metropolitan area. Why would your average New Yorker travel upstate to gamble when they have three casinos within reach of a subway? The only hope for the upstate casinos would be out-of-state visitors from Vermont, New Hampshire and possibly Massachusetts. Thus, this argument holds no water in the end. A perfect example is Pennsylvania which has a casino in the Poconos. Unless you are headed there on vacation, are a local resident, or are going skiing, no one goes to the casino in the Poconos. The same thing would happen with the upstate New York casinos. It is simply easier and more convenient to keep your gambling dollars in New York City just as people in Pennsylvania find it more convenient to keep their gambling dollars in Philadelphia and its suburbs.

There are the social costs associated with casino gambling. I am no prude in this area and take a more libertarian stance with respect to casinos. But one cannot ignore the numerous studies showing that for every gambling dollar generated, two dollars are expended on social costs- law enforcement, associated prostitution, alcoholism, gambling addiction, etc. Furthermore, casino gambling, like any form of gambling such as a state lottery, is essentially a tax on the poorer elements in society. Millionaires certainly gamble in casinos at high stakes games, but by and large it is not an every week thing. For the poor, it is an every week thing, if not every day thing. It is not unlike the many, many people who have to buy $15 in lottery tickets every day. The next time you see a line for people buying lottery tickets, check them out. They are usually the people who can least afford to purchase a lottery ticket. And quite frankly, casinos attract a certain class of person who prey on the less fortunate and the elderly. Having worked in the casino industry in Atlantic City, some of the repeat thieves caught there simply shifted their operations to Pennsylvania or Delaware. And some of the thieves from Connecticut and elsewhere have shown up in Atlantic City.

To conclude, the plan for seven casinos and where they are eventually located makes no sense and would be self-defeating. Leaving aside the societal costs which can be debated, the usual course is that after the initial excitement dies down, the revenues projected by “state financial experts” fail to be realized. Casino gambling is not a panacea for a state’s financial health or for a region’s employment situation. Based on an average of public opinion polls taken in 2013, this vote can go either way although it is currently trending towards approval.

Suggestion to New York voters: Vote “NO” on Proposal #1 on Election Day. It may prove more prudent to build a huge amusement park in central New York state to increase tourism, improve employment and generate state revenue than building seven casinos.